Exhibit e(2)
DISTRIBUTION AGREEMENT
AGREEMENT, dated as of May 5, 2000, by and between CitiFunds Trust III, a
Massachusetts business trust (the "Trust"), and CFBDS, Inc., a Massachusetts
corporation ("Distributor"), with respect to shares of beneficial interest of
the Trust's series, CitiFunds Cash Reserves and CitiFunds U.S. Treasury Reserves
(collectively, the "Funds"), designated as Cititrade Cash Reserves Shares and
Cititrade U.S. Treasury Reserves Shares, respectively ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and other
assets;
WHEREAS, the Trust wishes to retain the services of a distributor for
Shares and has registered the Shares under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, the Trust has adopted a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") and may enter into related
agreements providing for the distribution and servicing of Shares;
WHEREAS, Distributor has agreed to act as distributor of the Shares for
the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of Shares in jurisdictions wherein Shares may be legally offered
for sale; provided, however, that the Trust in its absolute discretion may issue
Shares in connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Trust or of the Funds
with any other investment company or trust or any personal holding company, or
the acquisition of the assets of any such entity or another series of the Trust;
or (iii) any offer of exchange permitted by Section 11 of the 0000 Xxx.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of Shares and agrees that it will sell the Shares as agent for the
Trust at prices determined as hereinafter provided and on the terms hereinafter
set forth, all according to the then-current prospectus and statement of
additional information of each Fund with respect to the Shares (the "Prospectus"
and the "Statement of Additional Information"), applicable laws, rules and
regulations and the Declaration of Trust of the Trust. Distributor agrees to use
its best efforts to solicit orders for the sale of Shares, and agrees to
transmit promptly to the Trust (or to the transfer agent of the Funds, if so
instructed in writing by the Trust) any orders received by it for purchase or
redemption of Shares.
(c) Distributor may sell Shares to or through qualified securities
dealers, financial institutions or others. Distributor will require each dealer
or other such party to conform to the provisions of this Agreement, the
Prospectus, the Statement of Additional Information and applicable law; and
neither Distributor nor any such dealers or others shall withhold the placing of
purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares from the Trust only to the extent that
it shall have received unconditional purchase orders therefor. Distributor will
not make, or authorize any dealers or others to make: (i) any short sales of
Shares; or (ii) any sales of Shares to any Trustee or officer of the Trust, any
officer or director of Distributor or any corporation or association furnishing
investment advisory, managerial or supervisory services to the Trust, or to any
such corporation or association, unless such sales are made in accordance with
the Prospectus and the Statement of Additional Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding Shares, except such information or
representations as are contained in the Prospectus, the Statement of Additional
Information or advertisements and sales literature prepared by or on behalf of
the Trust for Distributor's use.
(f) The Trust agrees to execute any and all documents, to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with the
qualification of Shares for sale in such states as Distributor and the Trust
agree.
(g) No Shares of any Fund shall be offered by either Distributor or the
Trust under this Agreement, and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Trust, if and so long as the
effectiveness of the Trust's then current registration statement as to Shares of
that Fund or any necessary amendments thereto shall be suspended under any of
the provisions of the 1933 Act, or if and so long as a current prospectus for
that Fund with respect to Shares as required by Section 10 of the 1933 Act is
not on file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph (g) shall in any way restrict the Trust's
obligation to repurchase any Shares from any shareholder in accordance with the
provisions of the applicable Fund's Prospectus or charter documents.
(h) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares whenever, in its sole discretion, it deems
such action to be desirable.
2. Offering Price of Shares. All Shares sold under this Agreement shall be
sold at the public offering price per Share in effect at the time of the sale,
as described in the Prospectus. The excess, if any, of the public offering price
over the net asset value of the Shares sold by Distributor as agent, and any
contingent deferred sales charge applicable to Shares as set forth in the
applicable Fund's Prospectus, shall be retained by Distributor as a commission
for its services hereunder. Out of such commission Distributor may allow
commissions, concessions or agency fees to dealers or other financial
institutions, including banks, and may allow them to others in its discretion in
such amounts as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions,
concessions or agency fees shall be uniform to all dealers and other financial
institutions. At no time shall the Trust receive less than the full net asset
value of the Shares, determined in the manner set forth in the Prospectus and
the Statement of Additional Information. Distributor also may receive such
compensation under the Trust's Distribution Plan as may be authorized by the
Trustees of the Trust from time to time.
3. Furnishing of Information.
(a) The Trust shall furnish to Distributor copies of any information,
financial statements and other documents that Distributor may reasonably request
for use in connection with the sale of Shares under this Agreement. The Trust
shall also make available a sufficient number of copies of the Funds' Prospectus
and Statement of Additional Information for use by the Distributor.
(b) The Trust agrees to advise Distributor immediately in writing:
(i) of any request by the Securities and Exchange Commission for
amendments to any registration statement concerning a Fund or to a
Prospectus or for additional information;
(ii) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of any such
registration statement or Prospectus or the initiation of any proceeding
for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in any such registration statement or Prospectus
or which requires the making of a change in such registration statement or
Prospectus in order to make the statements therein not misleading; and
(iv) of all actions of the Securities and Exchange Commission with
respect to any amendments to any such registration statement or Prospectus
which may from time to time be filed with the Securities and Exchange
Commission.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses:
compensation of Trustees who are not "interested persons" of the Trust;
governmental fees; interest charges; loan commitment fees; taxes; membership
dues in industry associations allocable to the Trust; fees and expenses of
independent auditors, legal counsel and any transfer agent, distributor,
shareholder servicing agent, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming shares of beneficial interest and
servicing shareholder accounts; expenses of preparing, typesetting, printing and
mailing prospectuses, statements of additional information, shareholder reports,
notices, proxy statements and reports to governmental officers and commissions
and to existing shareholders of the Funds; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Funds,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Funds (including
but not limited to the fees of independent pricing services); expenses of
meetings of shareholders; expenses relating to the issuance, registration and
qualification of shares; and such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust may be a party and the legal obligation which the Trust may have to
indemnify its Trustees and officers with respect thereto.
(b) Except as otherwise provided in this Agreement and except to the
extent such expenses are borne by the Trust pursuant to the Distribution Plan,
Distributor will pay or cause to be paid all expenses connected with its own
qualification as a dealer under state and federal laws and all other expenses
incurred by Distributor in connection with the sale of Shares as contemplated by
this Agreement.
(c) Distributor shall prepare and deliver reports to the Trustees of the
Trust on a regular basis, at least quarterly, showing the expenditures with
respect to Shares pursuant to the Distribution Plan and the purposes therefor,
as well as any supplemental reports that the Trustees of the Trust, from time to
time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the
Trust may repurchase Shares offered for resale to it and redeem Shares at their
net asset value.
6. Indemnification by the Trust. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify Distributor,
its officers and directors, and any person which controls Distributor within the
meaning of the 1933 Act against any and all claims, demands, liabilities and
expenses that any such indemnified party may incur under the 1933 Act, or common
law or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the registration statement for any Fund, any
Prospectus or Statement of Additional Information, or any advertisements or
sales literature prepared by or on behalf of the Trust for Distributor's use, or
any omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, unless such statement or omission was
made in reliance upon and in conformity with information furnished to the Trust
in connection therewith by or on behalf of Distributor. Nothing herein contained
shall require the Trust to take any action contrary to any provision of its
Declaration of Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust, its officers and Trustees and any person which controls the Trust within
the meaning of the 1933 Act against any and all claims, demands, liabilities and
expenses that any such indemnified party may incur under the 1933 Act, or common
law or otherwise, arising out of or based upon (i) any alleged untrue statement
of a material fact contained in the registration statement for any Fund, any
Prospectus or Statement of Additional Information, or any advertisements or
sales literature prepared by or on behalf of the Trust for Distributor's use, or
any omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, if such statement or omission was made
in reliance upon and in conformity with information furnished to the Trust in
connection therewith by or on behalf of Distributor; and (ii) any act or deed of
Distributor or its sales representatives that has not been authorized by the
Trust in any Prospectus or Statement of Additional Information or by this
Agreement.
8. Term and Termination.
(a) Unless terminated as herein provided, this Agreement shall continue in
effect as to each Fund until May 5, 2001 and shall continue in full force and
effect as to Shares for successive periods of one year thereafter, but only so
long as each such continuance is approved (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of Shares of the Fund, or (ii) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party and who have no direct or
indirect financial interest in this Agreement or in the operation of the
Distribution Plan or in any agreement related thereto ("Independent Trustees"),
cast at a meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated as to any Fund on not less than
thirty days' nor more than sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the particular Fund
in question, and not any other fund or series of the Trust. The term "CitiFunds
Trust III" means and refers to the Trustees from time to time serving under the
Declaration of Trust of the Trust, a copy of which is on file with the Secretary
of the Commonwealth of Massachusetts. The execution and delivery of this
Agreement has been authorized by the Trustees, and this Agreement has been
signed on behalf of the Trust by an authorized officer of the Trust, acting as
such and not individually, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the assets and property of the Trust as provided in the
Declaration of Trust.
10. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts and the provisions of the 1940
Act.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
CitiFunds Trust III
on behalf of its series
CitiFunds Cash Reserves
and
CitiFunds U.S. Treasury Reserves
By: /s/ Xxxxxx X. Xxxxxxxx
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CFBDS, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
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